Cost Inflation Index Table From 1981-82 To 2015-16 For Capital Gains Tax

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Cost Inflation Index Table is very important for the purpose of payment of capital gains tax and is released by the Income Tax Department every year.

The table helps you to calculate capital gains tax on property sold. Let's understand the importance of this table with precise calculation.

Cost Inflation Index Table From 1989 To 2015-16 For Calculation Capital Gains Tax

 FINANCIAL YEAR COST INFLATION INDEX TABLE 2015-16 1081 2014-15 1024 2013-14 939 2012-13 852 2011-12 785 2010-2011 711 2009-2010 632 2008-2009 582 2007-2008 551 2006-2007 519 2005-2006 497 2004-2005 480 2003-2004 463 2002-2003 447 2001-2002 426 2000-2001 406 1999-2000 389 1998-1999 351 1997-1998 331 1996-1997 305 1995-1996 281 1994-1995 259 1993-1994 244 1992-1993 223 1991-1992 199 1990-1991 182 1989-1990 172 1988-1989 161 1987-1988 150 1986-1987 140 1985-1986 133 1984-1985 125 1983-1984 116 1982-1983 109 1981-1982 100

A look at the table above and you would realize that inflation has eaten away into the value of money. If you bought a property for Rs 1 lakh in 1982-1983 and sold the same for Rs 25 lakh in 2015-16, why should you pay capital gains tax on the entire profit of Rs 24 lakh, as there has been an inflation.

Hence, the Income Tax Department comes up with a cost inflation index, which helps calculate capital gains with the help of the index and pay tax accordingly.

How to calculate capital gains with cost inflation index?

Let us say that you purchased an apartment for Rs 20 lakhs in financial year 1985-86 and sold the same for Rs 75 lakhs in 2015-16. Then you do not have to pay capital tax on the profit i.e. Rs 75 lakhs-Rs 25 lakhs. But, your capital gains tax would be calculated as follows:

Actual Cost Of Purchase x Cost inflation Index On year of Sale/Cost Inflation Index On Year Of Purchase.

So, capital gains would be Rs 20 lakhs x 1081/133. This would be far higher than the value of sale, so you would not have to pay capital gains.

You need to calculate your tax based on the above formula before paying a tax. In case you do not want to pay the capital gains tax you can invest in another house or in capital gains tax saving bonds. Read more on how to save capital gains tax

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Story first published: Tuesday, September 22, 2015, 10:34 [IST]